In this informal tutoring session, Michael Strong guides participant Rishai through the opening paragraphs of The Bitcoin Standard to unpack the fundamentals of money and Bitcoin’s place within that framework. The dialogue begins with a brief definition of Bitcoin as a digital invention that solves the age‑old problem of moving economic value across time and space. Michael then probes Rishai on why moving value has historically been difficult, leading to a discussion of pre‑Bitcoin monetary systems, the concept of currency, and the necessity of widespread acceptance for a medium of exchange to have value. The conversation shifts to the origins of money, contrasting barter with the emergence of standardized currencies, and explores historical examples of money (gold, paper, seashells, cigarettes) to illustrate why societies adopt a common unit of account. Throughout, Michael uses Socratic questioning to surface Rishai’s intuitive understandings, clarifying that a currency must be widely used, trusted, and consistent, whereas barter is limited to small, familiar groups. The session ends with Michael acknowledging time constraints and promising to continue the money discussion later, while wishing Rishai luck in a contest.
Chapters
I wanted to dig in on, uh, Bitcoin. Do you know anything about Bitcoin at all?
Um, I know basic of basics, I guess. I know it's an online currency that, um, people hold to a high standard today, but other than that, don't know.
No problem. Are you there?
Yes. Are you?
Can you hear me? Yeah. Yeah. Your, your voice faded out for a minute.
Can you hear me?
Yeah. Can you hear me?
Okay. Yes.
All right. Great. Which case, yeah, let's, I, I just, there's a book called The Bitcoin Standard, which I think is excellent. So let's just read the first 2 paragraphs and we won't, figure everything out. But do you want to read the paragraph in the chat or shall I?
I can go for it. Bitcoin is an invention leveraging the technological possibilities of all of humanity's existence. How to move economic value across time and space. In order to understand Bitcoin, one must understand money, and to understand money, there is no alternative to the study of the function and history of money.
Great. Do you have any questions or comments on that paragraph?
Not really.
So I wonder what they mean by an invention leveraging the technological possibilities of the digital age to solve a problem that has persisted for all of humanity's existence: how to move economic value across time and space. What do they mean by how to move economic value across time and space? Why is that a problem, long-term problem?
Well, when I read that, I first thought of moving or the economy and moving goods and values and money across the, the world and, and different webs. And I thought that Bitcoin was an answer because it's digital and, you know, a lot of things are digital these days and it can move around easily.
Why would they say that how to move economic value across time and space is a problem that's been persisted for all of humanity's existence?
I think they said that because, I mean, before all the new airplanes and technology we had, you had to move goods and services across the world somehow. And I think time management was a problem. The quality of the goods was a problem. And I think just in terms of monetary services, Bitcoin solved that because it's online.
Okay. So I'm thinking, so it's the first sentence is Bitcoin is the newest technology to serve the function of money. So given that, you know, Bitcoin, because it's digital, is easy to move, or you've been talking about moving goods and services around the world, how did money, how did money work before Bitcoin, because it is hard to move goods and services around the world. So what was money before, before Bitcoin?
Well, I mean, there was still all the different currencies and stuff. Bitcoin is just another currency, I think, um, and you had to move the money around somehow also.
So what is a currency then? Can anybody— can Alana create Alana's currency? Can I create Michael's currency?
Well, in order to become a currency that everybody uses, the currency has to have a value of some sort. For example, the US dollar. The United States is a big country and it has a big influence on the world, and we use the US dollar. So it's— I think its value is mostly in that a lot of people use it and it has worth in a big part of the world. But other than that, it's a piece of paper and some metal coins.
Got it. So you're saying that the reason we can't have an Alana currency or Michael currency is, A, you need— everybody needs to be around the same thing. How did you put it? You expressed it a certain way when you said that everybody needs to use it kind of thing.
Yeah, something like that. It has to be used. Frequently to have value. Like if I just created a currency called, or whatever it was called, and it was another piece of paper with other logos and designs on it, um, it wouldn't really be anything if only I used it and nobody else would accept it or, you know, use it.
Got it. So that was part of it. And then there was another piece about the US being big and powerful and so forth. How does that relate to the everybody needs to use it kind of thing?
Well, I guess my thought process there was that the US is a big country and there's a lot of people, there's a lot of Americans, and they all probably primarily use the USD, especially if they live in the United States and to do business with the United States. I'm not quite sure how that works, honestly, but I'm assuming the USD has some influence on that.
Okay. Let's get, we're digging into kind of, I would say, the mystery of money, but let's get to the next paragraph. Do you want to read it, Rishai?
Yeah. The simplest way for people to exchange value is to exchange valuable goods with one another. This process of direct exchanges is referred to as barter. But is only practical in small circles with only a few goods and services produced. In a hypothetical economy of a dozen people isolated from the world, there is not much scope for specialization and trade, and it would be possible for individuals to engage in the production of the most basic essentials of survival and exchange them among themselves directly. Barter has always existed in human society and continues to this day. But it is highly impractical and remains only in use in exceptional circumstances, usually involving people with extensive familiarity with one another.
Had you heard of barter before?
I have.
Does it make sense that in a very small economy we could get along strictly by bartering things with each other?
I think so, it does.
And The way— the reason they often— most, most histories of money start with barter. Um, can you imagine why they start by explaining barter?
Probably because that's the base level, especially if your economy is still small, maybe not a dozen people, but I mean, maybe a little larger than that. But, um, there's not— I guess the first thing I thought of was there's not too many classes. There may not be a extremely high upper class and an extremely low lower class, people would be able to barter with things that they have on a daily basis.
So why do you think people would start creating money or using something as money?
I think it's because with a bigger economy, it's consistent and everybody can have access to it. Um, it's not like gold, which is, you know, it's finite. There's only a certain amount of gold on Earth. But I'm not saying that paper is infinite, like most money is, but it's more efficient, it's more sustainable, and it's easier to use.
So historically, people have used all kinds of things for money. There have been people who have used seashells for money, certain kind of rock. In prisons, often prisoners use cigarettes for money. So why would people use things like seashells or cigarettes for money?
That's their form of, I mean, that, that could be their form of currency. I don't think it has to be strictly paper or something, but something that has value.
So if we're, why would you go from barter to using like cigarettes or seashells?
Probably. I mean, in a place like a prison, not that I know much about it, um, there may not be a lot of stuff for you to barter. Um, I think cigarettes are probably one that, that has value to them. There might be more of it than, I don't know, seashells. Um, but I think it also depends on how many people are in the system and using cigarettes as a currency. If it's small, then maybe they could barter. But if it's bigger, like the tech said, then might have to use the currency like they are.
And what's the difference between using a currency and just, just bartering?
I think currency is consistently one thing like with the USD, set amount of coins and then a set amount of paper strips. Um, I think with— I think bartering, you can barter, I don't know, a book for a pen and different things for other things. You're trading, it's not always consistent.
Got it. Had you ever thought about money much before?
A few times, but maybe not as into business.
Got it. Um, well, I know that you have a contest today, and so we're not gonna figure out all about money just today. So I'm gonna let you go and have a fantastic time on the contest, and we'll pick up the theme of money in the future. Okay.
